Professor Ciarán Ó Catháin:

On behalf of THEA, I thank the committee for the opportunity to present to it. We will add to the comments made about the work of Mr. Cassells and his group on their report. THEA accepts without reservation the two fundamental and compelling conclusions of the Cassells report, namely, that higher education has made a positive contribution to Ireland's social and economic development in the past 40 years and that higher education is now threatened as a result of the deep financial cuts since 2008 and the demographic trends that would see a continuing and dramatic increase in enrolments.

The detailed analysis of the impact of the recession and funding cuts on higher education did not disaggregate and examine the impact at the subsectoral level. Figure 1 on page 2 of our submission shows that total funding per student in institutes of technology fell steeply below that for universities and colleges in 2010 and has not recovered subsequently. The total recurrent funding per student within the technological sector declined by 25% between 2008 and 2015 compared with 19% in universities and colleges. Had funding been maintained at 2008 levels, income to the technological sector would have been €232 million more than is the case today.

Turning to the profile and vision of institutes of technology, the institutes have carved out a distinctive, differentiated role within the overall higher education system. We supply highly skilled graduates to a growing technological and general STEM-based sector in the Irish economy and account for 38% of all higher education graduates in the country, some 25,000 graduates in 2014-15. We drive a research and innovation agenda that responds to the needs of regional development, indigenous SMEs and foreign direct investment. This includes 823 collaborative research and consultancy agreements with industry, 573 companies supported in incubation centres and €68.5 million generated in research income, including €5 million in industry-funded research. Further detail is contained on page 3 of our submission.

We play a critical role in enhancing higher education participation, with 27% of entrants coming from targeted socioeconomic groups, 18% of full-time entrants being mature students and 32% of admitted students holders of a further education and training qualification. Within our sector, 56% of students are in receipt of a grant.

I will address the financial challenges. Since the economic crisis of the late 2000s, funding for higher education has declined sharply. For the institute of technology sector, between 2008 and 2015 the State grant fell by 35%, student numbers grew by 30%, core staffing levels fell by 12%, total recurrent income per student fell by 25%, total State income per student contracted by 50% as opposed to a 46% contraction across the higher education system as a whole, and our student-staff ratio increased by 33% from 12.9:1 to 17.1:1.

The impact of the decline in the State subvention to higher education, the increase in student numbers and the decline in staff numbers have been acutely felt in our sector because the options for generating income from non-State sources are limited. One third of our STEM programmes are heavily reliant on capital investment in ICT infrastructure, engineering and laboratory outfitting. Cuts have undermined the capacity of institutes to develop and sustain the additional supports that their student cohort might reasonably expect, especially at levels 6 and 7.

A significant number of institutes are now confronted with the perilous financial scenario revealed by the recent publication of the higher education financial review of the institute of technology sector. The sector has moved from generating a surplus in 2008 to an overall deficit of €2.7 million in 2014-15. Overall reserves fell by 40% from €132.5 million to €78.7 million. Six institutes of technology are facing immediate sustainability challenges, with four others potentially at risk. Our buildings have become progressively degraded and, in some instances, our equipment has become obsolete after almost ten years of minimal investment.

The sector has responded well to the crisis by cutting staff and non-pay costs, pursuing innovative developments in areas such as part-time and online provision and the recruitment of international students. Without substantial investment, though, the core purpose and viability of our sector are at risk.

As to funding scenarios, the national objective for higher education is to expand the school population, which means that there will always be a predominant reliance on State funding. In response to the Cassells funding options, THEA is mindful of the national objective around economic development, social cohesion and equality of opportunity. Great benefits accrue to society from universal participation in higher education, for example, employment opportunities, health and well being, reduced crime levels and enhanced opportunities across the generations. In an era of mass participation in higher education, those who fail to gain access become the exception rather than the rule. THEA holds that the Cassells report's funding option No. 3 does not align with these objectives and would prove a disincentive for the majority of students in the institute of technology sector, as it would involve the transfer of fees, which were heretofore carried by the State, onto this cohort.

In reflecting on options Nos. 1 and 2, THEA considers that it is an opportune moment to revisit the national ambition regarding educational attainment and that it may be timely to make a commitment to providing free undergraduate education to all who seek it. This could be approached in a number of ways. For example, higher education could be free at the point of entry and exit up to ordinary bachelor degree level, that is, level 7 on the national framework of qualifications, NFQ, standard. No contribution charge would be levied on students registered on programmes leading to the higher certificate and ordinary bachelor degree awards. If pursued, this would involve a net marginal cost to the State of €45.7 million per annum. However, a more ambitious approach would be to provide free higher education to all students on honours bachelor degree programmes to level 8. This would involve an additional net marginal cost of €197 million.

This submission draws attention to the acute financial challenges facing all of the higher education sector and the very particular and severe impact the cuts have had on institutes of technology. The disproportionate impact on the institutes of technology means that their distinctive and unique contribution is threatened. Regardless of which funding option is chosen there is a need for additional and urgent State investment and an analysis of the sub-sectoral impact of any such intervention. With regard to the funding options identified in the Cassells report, THEA has proposed a variation of options one and two, in that the State and the employer contribution would be the funding source up to level 7, with no student contribution applying. Regarding level 8 and higher, and bearing in mind the greater cost associated with these higher levels and THEA's acceptance of the position that private benefit accrues the further one progresses in higher education, a student contribution may be appropriate.

Options one and two in the report estimate that an additional €1.26 billion and €997 million will be required in State funding up to 2030. THEA proposes that an option of front-loading this additional funding to provide free higher education up to ordinary bachelor level 7 be actively considered. The respective contributions of the State, the student and the employer will be an important part of the policy decisions on the future funding of higher education. THEA must conclude by reiterating the existential challenge which nearly a decade of cutbacks has now presented to the technological sector. If not addressed in an urgent and comprehensive manner this challenge threatens the immediate and long-term future of our sector.